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Balaji Industrial Corporation Ltd.

BSE: 500036 Sector: Metals & Mining
NSE: BALAJIIND ISIN Code: INE455A01018
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Balaji Industrial Corporation Ltd. (BALAJIIND) - Auditors Report

Company auditors report

INDEPENDENT AUDITORS' REPORT

TO THE MEMBERS OF BALA JI INDUSTRIAL CORPORATION LIMITED

I. Report on the Financial Statements

We have audited the accompanying financial statements of M/s. BALAJI INDUSTRIALCORPORATION LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2014 Statement of Profit and Loss and Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.

II. Management's Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in sub-section (3C) ofsection 211 of the Companies Act 1956 ("the Act") (which continues to beapplicable in respect of section 133 of the Companies Act 2013 in terms of GeneralCircular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs) and inaccordance with the accounting principles generally accepted in India. This responsibilityincludes the design implementation and maintenance of internal control relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

III. Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit We conducted our audit in accordance with Standards on Auditing issued by theInstitute of Chartered Accountants of India Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement. An audit involvesperforming procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditors' judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error. In making those risk assessments the auditors consider internalcontrol relevant to the Company's preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion.

IV. Basis for Qualified Opinion

a) In respect of 9 accounts in various banks in the name of the Company it has beenrepresented that they are inoperative throughout the year However no bank statements /confirmation of balances were produced to us and hence we are unable to comment on thetransaction if any passed through these accounts.

b) In respect Corporate Guarantees given in earlier years by the Company on behalf ofOther Bodies Corporate liability has devolved on the Company and recall notices have beenserved for Principle of f. 1512.00 lakhs (P.Y. Rs. 1512.00 lakhs) and unqualifiedinterest thereon. However no provision is made in the Books for such liability and suchnon-provision is against the fundamental accounting principles of accrual prudence andconservatism as per Accounting Standard-1 issued by the ICAI and also referred in section211 (3C) of the Companies Act

V. Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph the financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) in the case of the Balance Sheet of the state of affairs of the Company as atMarch 31 2014;

(b) in the case of the Statementof Profit and Loss of the PROFIT forthe year ended onthatdate; and

(c) in the case of Cash Flow Statement of the cash flows forthe year ended on thatdate.

VI. Emphasis of Matter

We draw attention to Note No. 33 to the Financial Statements which state that theCompany is in the process of creating a charge as required under Companies Act 1956 forit's land and buildings situated at Nellore for secured loans availed by the Company. Ouropinion is not qualified in respect of this matter.

VII. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2003 as amended by theCompanies (Auditor's Report) (Amendment) Order 2004 (together "the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 4 and5 of the Order.

2. As required by section 227(3) of the Act we report that:

a. We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;

b. In our opinion proper Books of Account as required by law have been kept by theCompany so far as appears from our examination of those books;

c. The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the Books of Account;

d. Except for the effects / possible effects of the matter described in the Basisfor Qualified Opinion paragraph in our opinion the Balance Sheet Statement of Profitand Loss and Cash Flow Statement comply with the Accounting Standards referred to insub-section (3C) of section 211 of the Act;

e. On the basis of written representations received from the directors as on March 312014 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2014 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Act.

For M/s. P.A. REDDY & CO For M/s. CNGSN & ASSOCIATES
Chartered Accountants Chartered Accountants
Regn No.007368S Regn No.004915S
P. ASHOK REDDY C N GANGADARAN
Partner Partner
Membership No: 023202 Membership No: 011205
Place: Chennai
Date : 27th May 2014

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT OF BALAJI INDUSTRIAL CORPORATION LIMITED

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

Based on the information and explanations furnished to us and the books and recordsexamined by us in the normal course of our audit we report that to the best of ourknowledge and belief:

i) In respect of its Fixed Assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.

(b) During the year as per the program of physical verification of all its assetslocated at different places the fixed assets have been physically verified in a phasedperiodical manner by the management which in our opinion is reasonable having regard tothe size of the Company and nature of its assets. As explained to us no materialdiscrepancies have been noticed on such verification.

(c) No fixed assets were disposed off during the year so as to affect the going concernstatus of the Company.

ii) In respect of inventories of finished goods work in process raw materials storesand spares:

(a) The Inventories have been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) The Company is maintaining proper records of inventories. The discrepancies noticedon verification between the physical stock and the book records were not material and thesame have been properly dealt with in the Books of Account.

iii) In respect of loans secured or unsecured from / to companies firms or otherparties covered in the register maintained under section 301 of the Companies Act 1956:

(a) The Company had taken unsecured loans from five parties covered in the registermaintained under section 301 of the Companies Act 1956. The maximum amount of loaninvolved during the year was '. 3373.27 lakhs and the year-end balance of loans taken fromsuch parties was Rs. 1985.52 lakhs.

(b) In our opinion although the Company has taken interest-free loans from fiveparties the other terms and conditions on which loans have been taken from companies orother parties listed in the register maintained under section 301 of the Companies Act1956 are not prima facie prejudicial to the interest of the Company

(c) During the year the Company has not granted any loan to any party referred abovenor any such loans were outstanding at the end of the year.

(d) Such loan is interest free and is without any terms for repayment and the same inour opinion is not prejudicial to the interests of the Company.

(e) In the absence of any terms we are unable to comment on the regularity ofrepayment of principal amount and payment of interest.

iv) In respect of internal control procedures:

(a) The internal control system for sale of goods purchase of fixed assets andservices rendered by the Company are adequate and commensurate with the size of theCompany and the nature of its business.

(b) The internal control system for purchase of stores raw materials plant &machinery equipments and other assets are adequate and commensurate with its size andnature of its business.

v) In respect of transactions that need to be entered into a register in pursuance ofsection 301 of the Companies Act:

(a) There are no contracts or arrangements during the year that need to be entered inthe register.

vi) In respect of public deposits:

(a) The Company has not accepted any deposits from the public. Therefore theprovisions of section 58A and 58AA of the Companies Act 1956 and Companies (Acceptance ofDeposits) Rules 1975 are not applicable to the Company.

vii) In respect of internal audit system:

(a) In our opinion the Company has an internal audit system commensurate with its sizeand the nature of its business.

viii) In respect of cost records:

(a) According to the information and explanations given to us the Central Governmenthas prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act1956 for steel products of the Company. We have broadly reviewed such records and are ofthe opinion that prima facie the prescribed accounts have been made and maintained ingeneral.

ix) In respect of statutory dues:

(a) The Company has been generally regular in depositing undisputed dues of ProvidentFund Investor Education and Protection Fund Employees State Insurance Wealth TaxService Tax Customs Duty Excise Duty Cess and other applicable statutory dues with theappropriate authorities during the year.

(b) Dues relating to Sales Tax/Excise Duty/Cess/Service Tax/Income Tax which have notbeen deposited on account of disputes with the related authorities are stated in thetable below:

Name of the Statute Period to which the amount relates Amount Rs. In Lakhs Forum where the dispute is pending
Sales Tax 1993-94 3.95 A.P.High Court
Sales Tax 1994-95 6.15 A.P. High Court
Sales Tax 1999-00 5.39 STAT
Sales Tax (Paramount) 1993-94 17.20 A.P. High Court
Income tax 1999-00 8.28 C. I.T. (Appeals)
Income tax 2000-01 61.27 C.l.T. (Appeals)
Income tax 1996-97 192.33 A.P. High Court
Income tax 1997-98 23.67 A.P. High Court
Central Excise 1997-98 146.45 A.P. High Court
Central Excise 1998-99 2.13 A.P. High Court

x) I n respect of its losses:

a) The Company's accumulated losses as at March 312014 as adjusted after taking intoaccount the qualifications in the audit report to the extent the qualifications arequantified are more than 50% of its net worth. The Company has incurred cash losses duringthe financial year ended on that date and in the immediately preceding financial year.

xi) in respect of repayment of dues to banks financial institutions and debenturesholders:

a) The Company has not defaulted in repayment of certain dues to financialinstitutions banks and debenture holders.

xii) In respect of loans on the basis of security by way of pledge of sharesdebentures and other securities:

a) The Company has not granted any loans and advances on the basis of security by wayof pledge of shares debentures and other securities.

xiii) In respect of applicability of any special statutes:

a) The Company is not a chit fund / nidhi / mutual benefit fund / society.

xiv) In respect of dealing in shares securities debentures and other investments:

a) The Company has not dealt / traded in shares securities and debentures and otherinvestments during the year.

xv) In respect of guarantees given for loans taken by others from banks or financialinstitutions:

a) The company has given guarantees for loan taken by others from banks or financialinstitutions and in our opinion the terms and conditions were not prejudicial to theinterests of the company at the time when such guarantees were given.

xvi) In respect of utilization of term loans:

a) The Company has not raised any term loans from banks and / or financial institutionsduring the year.

xvii) In respect of utilization of funds raised on short-term basis:

a) On the basis of overall examination of the Balance Sheet of the Company there areno funds raised on a short term basis which have been used for long term investment.

xviii) In respect of preferential allotment of shares:

a) According to the information and explanations given to us during the period coveredby our audit report the company has not made preferential allotment of shares to partiesand companies covered in the register maintained under section 301 of the Companies Act1956.

xix) In respect of security and charge created against debentures:

a) The Company has not issued any debentures during the year.

xx) In respect of public issues:

a) The Company has not raised any money by way of public issues during the year.

xxi) In respect of frauds:

a) In our opinion and according to the information and explanations given to us nofraud on or by the Company has been noticed or reported during the period that causes thefinancial statements to be materially misstated.

For M/s. P.A. REDDY & CO For M/s. CNGSN & ASSOCIATES
Chartered Accountants Chartered Accountants
Regn NO.007368S Regn No.004915S
P. ASHOK REDDY C N GANGADARAN
Partner Partner
Membership No: 023202 Membership No: 011205
Place: Chennai
Date : 27th May 2014

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